While the last housing crisis was defined by an abundance of supply, this housing crisis will be defined by its lack of supply. Millennials are just hitting an age when they can financially handle purchasing a home - but not quite at today's prices.
Millennials are facing a problem where they can afford a home at the prices they were five years ago, but because of the lack of supply, prices have skyrocketed and ultimately boxed people out of the market. In KB Homes' quarterly earnings call recently, CFO Jeff Kaminski summed up this crisis:
"Over the last three years, it’s kind of interesting, our first-time buyer mix has ranged right around 50% for the last three years, and if you put that in the context of how much our average selling price has lifted, I think it’s over $100,000 in that period. It shows you how we’ve been able to flex and find a first-time buyer in these higher income more desirable sub-markets where they have an easier time getting the mortgage and underwriting is getting easier, but it’s not easy yet," he said.
As Bob Bryan writes in this article for Yahoo Finance, Kaminski noted there's some light at the end of the tunnel if the labor market continues to recover and people head away from urban centers where housing supply is more available.